The International Financial Services Centre (IFSC) is a designated jurisdiction or concept that provides world-class financial services to non-residents and residents in a currency other than the domestic Indian rupee. It is a special zone set up under Section 18 of the Special Economic Zones Act, 2005. The first and currently only operational IFSC in India is located at GIFT City (Gujarat International Finance Tec-City) in Gandhinagar, Gujarat, which was established in December 2015. The core problem it was created to solve was to bring back to India the financial services and transactions that were being carried out by Indian entities in offshore financial centres.
The IFSC is governed by the International Financial Services Centres Authority (IFSCA), a statutory body established on April 27, 2020, under the International Financial Services Centres Authority Act, 2019 (Act No. 50 of 2019). The IFSCA functions as a unified regulator for all financial products, financial services, and financial institutions within the IFSC, replacing the fragmented regulation by multiple domestic regulators like the Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI), Insurance Regulatory and Development Authority of India (IRDAI), and Pension Fund Regulatory and Development Authority (PFRDA). A key mechanism is that all financial services transactions in an IFSC must be in a foreign currency as specified by the Authority. The IFSCA Act, 2019, grants the Authority the power to modify provisions of other enactments in relation to IFSCs under Section 31.
The IFSC framework connects to the Foreign Exchange Management Act (FEMA), 1999, which includes a carve-out in Section 44A stating that the RBI's powers under FEMA do not extend to an IFSC. Recently, the IFSCA (Global In-House Centres) Regulations, 2025, replaced the 2020 regulations effective December 29, 2025, widening the scope of permissible activities and removing the 20% cap on employee relocation. Furthermore, the Finance Bill 2025 (effective April 1, 2025) simplified the regime for IFSC fund managers, extending the eligibility period for new operations until March 31, 2030.